- Elected officials in Berkeley, California, are exploring the launch of an initial coin offering to raise funding for affordable housing.
- Berkeley City Council Member Ben Bartlett said the idea came from a desire to create some financial independence from the federal government.
- President Donald Trump has threatened to cut federal funding from sanctuary cities, and has specifically targeted Berkeley in tweets.
The City of Berkeley, one of the epicenters of liberal California, is considering a turn to cryptocurrency to reduce its reliance on federal funding in the Trump administration.
Berkeley would become the first city in the US to hold an initial coin offering (ICO) — a type of crowdfunding campaign that's become popular in the past year. The city would raise funds by selling digital assets called "tokens" that are backed by municipal bonds, a type of security issued by the local government. Buyers might spend these tokens at shops and restaurants or even pay rent at apartment rentals that participate in Berkeley's cryptocurrency ecosystem.
The goal is to raise funding for vital city projects like affordable housing and support services for the city's growing homeless population. Someday, homeless people might receive tokens to buy goods and services from local businesses that accept the currency, according to city leaders.
It's all talk for now, but according to Berkeley City Council Member Ben Bartlett, the creation of the city's own financing mechanism is a key part of building resiliency in the Trump era.
"Berkeley is the center of the resistance, and for the resistance to work, it must have a coin," Bartlett told Business Insider.
Bartlett has formed a committee with Berkeley Mayor
The idea for an ICO came about after President Donald Trump signed the Republican tax bill into law at the end of December, according to Bartlett.
The new legislation makes sweeping changes to the tax code for businesses, some of which undermine incentives that encourage private contractors to build affordable housing. An analysis by consultant and public accounting firm Novogradac & Company suggests the tax bill could reduce the future supply of affordable rental housing by nearly 235,000 homes over the next 10 years.
Berkeley is facing a shortage of affordable places to live, leading to gentrification, rising rents, and homelessness. The city counted nearly 1,000 homeless people last year. This represents a 17% increase from 2015 and a 43% increase from 2009, according to city data.
"We have a jobs explosion and a super tight housing crunch," Bartlett said, adding, "You're looking at a disaster. We thought we'd pull together the experts and find a way to finance [affordable housing] ourselves."
Bartlett said he expects the city's affordable housing budget to shrink under the Trump administration. An ICO offers a way for the local government to adapt, he said.
Berkeley wants to put bonds on the blockchain
Berkeley has another reason to develop a financial system outside of the federal government: It's the original sanctuary city, which makes it a safe haven under the law for refugees and undocumented immigrants. And that status doesn't go over well in Trump's administration.
As Trump continues to crack down on illegal immigration, elected officials in Berkeley have been strengthening their policy of refusing to cooperate with federal immigration officers. Tensions between Trump and the city reached a boiling point in February 2017, when the president vowed to pull federal funding from UC Berkeley after the campus experienced violent protests over the cancellation of a speech by conservative provocateur Milo .
The City of Berkeley could lead the way for other sanctuary cities to create financial independence from the federal government, Bartlett said.
"It's actually enabling us to fulfill our duty as a government. Our duty is to provide for our people. It's a violation of that duty to allow people to sleep in the streets," Bartlett said.